In 2007, First Company Purchased Second Company for $15,000,000 Cash

question 93

Multiple Choice

In 2007, First Company purchased Second Company for $15,000,000 cash. At the time of purchase Second Company had $18,500,000 in assets and liabilities of $11,000,000. After two years, the value of the assets purchased from Second Company has increased in value to $9,500,000. The 2009 balance sheet for First Company should show goodwill of:

• A)$2,500,000.
• B)$0.
• C)$7,500,000.
• D)$9,500,000.